2015 Budget Speech: The South African Department of Energy has been allocated ZAR7.5 billion for the 2015/16 financial year

On Tuesday, South African energy minister Tina Joemat-Pettersson unveiled that the Department of Energy (DoE) has been allocated ZAR7.5 billion for the 2015/16 financial year, up from ZAR7.4 billion in 2014/2015.

According to the minister in a speech given on Tuesday morning in parliament, the allocated funds have been earmarked with 93% for transfer to municipalities and state owned entities, while the remaining 7% is to be used for the energy department’s operational and capital expenditure.

South Africa has endured systematic blackouts over the past few months, creating a community who is no longer confident in the country’s energy sector, the minister said.

Joemat-Pettersson assured South Africans that the current power crisis is at the forefront of the energy department’s list of resolutions.

In efforts to resolve the energy crisis, Joemat-Pettersson said: “Partnerships have been established between government, labour, business and civil society to find solutions to our problems, in keeping with the great spirit of our country. The Five Point Plan was adopted by Cabinet as a blueprint for addressing our challenges.”

She continued: “Our government’s urgent response to load shedding has accelerated the finalisation of the much awaited Integrated Energy Plan.”

“Once approved by Cabinet, the Integrated Energy Plan will be published as a policy document. This plan will inform our future energy mix and prioritise policy interventions for future programmes within the energy sector.”

REIPPPP

On the subject of the renewable energy independent power producers procurement programme, Joemat-Pettersson said: “The REIPPPP request for proposals for an additional 1,800MW from existing bid submissions is on course for release to the market by June 2015.”

She highlighted that the bidding process is open to all unsuccessful bidders from all previous bid windows.

Joemat-Pettersson added that the DoE will also announce the appointment of additional preferred bidders from bid window 4 in early June 2015.

Support expansion

According to the minister’s statement, the Development Bank of Southern Africa and the German government-owned development bank KfW have partnered to establish the ‘Facility for Investment in Renewable Small Transactions, which will be launched in the next few weeks.

Joemat-Pettersson said that the DoE have submitted two new determinations to the National Energy Regulator of South Africa for an additional 6,300MW for REIPPPP, as well as 1,800MW for co-generation.

Parastatal Eskom has already secured the supply of 720MW of co-generation.

Joemat-Pettersson said: “In addition, we have revised the approach in relation to the procurement of co-generation in line with the integrated resource plan to assist with the current electricity challenges. The request for proposal (RFP) for the revised co-generation approach, totalling 1,800MW is on track for release to the market.”

The minister stated that the preferred bidders will be announced in Q3 of 2015.

She added: “The new approach will ensure that the approval process is expedited and financial close accelerated.”

Gas

According to the minister, the request for information (RFI) for gas fired generation was released to the market yesterday. The outcome of the RFI will guide the DoE in the design of the Gas to Power Procurement Programme for a combined 3,126MW allocation, Joemat-Pettersson explained.

“This is a significant step forward in the diversification of our energy mix. We expect the request for proposal to be released to the market in September 2015, with a bid submission phase planned for the first quarter in 2016,” she said.

Coal

The RFP for new coal-fired generation was open to the market from December 2014, with the bid submission initially scheduled for June 2015. The DoE has made the decision to extend this date by two months, until August 2015 to ensure “a successful procurement phase with firm results”.

The minister said that preferred bidders for this programme will be announced before the end of this calendar year.

Nuclear

With all vendor parades completed, the DoE will begin with the nuclear procurement process in the second quarter of this financial year to select a strategic partner in a competitive, fair, transparent and cost effective manner, the minister said in her statement.

According to the minister, the DoE expects to present the outcome of the procurement process to Cabinet by year end.

“We will finalise the business model for the re-establishment of the Nuclear Fuel Cycle Facilities to take advantage of our mineral resources and the beneficiation strategy of our government”, Joemat-Pettersson stated.

Cross-border collaboration

According to the minister this project could potentially be “the largest hydro-electric power project in the world, with the potential to power half the continent.”

She added: “There are huge economic spin-offs to be harnessed from this project, including industrialisation due to supplying goods and services, skills development relating to various aspects of hydropower development, and job creation.”

The minister said that the DoE is “negotiating a preferential procurement status for companies domiciled within South Africa and the Southern African Development Community so that they could take advantage of this economic opportunity.”

Currently South Africa and the DRC are finalising the structure of the business model. This step will give private sector investors the opportunity to work with the state on this project.

“Various small hydro projects have also been allocated under the IPP programme. In addition to this, the department in collaboration with other departments and entities are looking into the potential to develop micro hydro projects. Hydro IPPs from our neighbouring Mozambique and other [Southern African Development Community] SADC countries will be encouraged”, Joemat-Pettersson said.

Community benefits

Although not a direct community investment, the minister told the public that a nine year old “through displaying true entrepreneurial acumen, collected plastic waste around the Jeffrey’s Bay Wind farm and sold this to the project, raising enough funds to purchase his own bicycle.”

The minister added that the Duineveld community, who have previously not had access to basic services, now has every household connected to clean power due to the installation of a 75W solar panel.

Nicolette Pombo-van Zyl has been working in the African power, energy and water sectors since 2011, first with African Utility Week and now as the Editor of ESI Africa. She is also an Advisory Board member of the Global and African Power & Energy Elites publications. With her passion for sustainable business and placing African countries on the international stage, Nicolette takes a keen interest in current affairs and technology trends.